Aug. 19, 2019
Permission to republish original opeds and cartoons granted.
Up or down, President Trump owns the economy—and he has a lot to be proud of
Compared to this
point in Obama’s first term, the Trump economy is great. 2018 was the strongest
year for growth since 2005, and unemployment at 3.7 percent is still at its
lowest point in 50 years since 1969. Obama got reelected with 7.8 percent
unemployment in the final reading before the 2012 election. Almost 5.2 million
jobs have been created since Jan. 2017 when President Donald Trump took office
in the Bureau of Labor Statistics’ household survey. That blows the Obama out
of the water. At this point in his first term, the Obama economy had not
produced a single job.
Cartoon: To God’s Ears
How many lives
have gun control laws saved?
Video: Negative interest rates could spell the end of capitalism as we're paid interest to borrow money
Paying the
federal government or even individuals to borrow money will ruin incentives to
be frugal or to even work, so why do so many central bankers think it’s a good
idea?
Liz Peek: The economic sky isn’t falling – here’s what you need to know about scary ups and downs
“The Commerce
Department reported that U.S. retail sales surged 0.7 percent in July, up from
a 0.3 percent gain in June, beating expectations. Walmart just reported that
its ‘U.S. comp sales increased on a two-year stacked basis by 7.3%, which is
the strongest growth in more than 10 years.’ Also, the Labor Department
reported that productivity rose 2.3 percent in the second quarter, down from
3.5 percent in the first quarter, but a solid gain nonetheless, and one that
bodes well for future wage hikes. The U.S. consumer continues to defy
prognosticators; despite Democrats campaigning on the miseries of the middle
class, by gosh the middle class insists on streaming into Walmart and pumping
up the economy.”
Up or down, President Trump owns the economy—and he has a lot to be proud of
By Robert Romano
Right at the outset, let me say, you can’t talk down the economy. It’s either doing well, or it’s not, and by every measure, the Trump economy is doing just fine.
Certainly, the numbers are better than in 2012 when former President Barack Obama was facing reelection.
2018 finished out the year at 2.93 percent growth in the Gross Domestic Product, the strongest showing since 2005, edging out 2015’s 2.91 percent by a nose. The first two quarters of 2019 have delivered mixed results of 3.1 percent and 2.1 percent annualized, respectively.
Not terrible, and certainly no worse than any year put up by Obama, who in 2012 got reelected with just 2.2 percent growth.
Unemployment at 3.7 percent is still at its lowest point in 50 years since 1969, that is, other than the three other times we’ve hit that level in 2018 and 2019.
At this point in the Obama presidency, unemployment was 9.0 percent. Ultimately, Obama got reelected with 7.8 percent unemployment in the final reading before the 2012 election.
Almost 5.2 million jobs have been created since Jan. 2017 when President Donald Trump took office in the Bureau of Labor Statistics’ household survey.
That blows the Obama out of the water. At this point in his first term, the Obama economy had not produced a single job. To be fair, it was still shedding jobs from the recession as he came into office.
When you consider labor participation among working aged adults 16-to-64-years-old, we’ve seen marked improvement during the Trump administration after two decades of decline. Labor participation among that demographic was almost 77.4 percent in 1997. And then it began a steady decline through the 2000s and the 2010s before it finally bottomed in 2015 at 72.7 percent, according to the Bureau for Labor Statistics.
But now, through 2018, labor participation among working age adults is once again rising, with 2.2 million more 16-64-year-olds in the labor force, and labor participation rising to 73.6 percent.
Wages are accelerating during the Trump administration, coming in at 2.7 percent growth in the second quarter and averaging 2.66 percent since the beginning of 2017.
Wages averaged 1.97 percent growth per quarter during the Obama administration.
These are all major improvements. The reason Obama got reelected in 2012, when considering the economy, was because the numbers, after bottoming at the end of 2009, were all moving in the right direction by the time he was nearing the end of his first term.
Of course, what goes up must eventually come down. It’s called the business cycle for a reason, and now some are starting to worry that we’re nearing the end of that cycle with certain recession signals begin to go off. They’re not wrong, but that’s still speculative. Those making a prediction there might be a downturn before Nov. 2020 will either be right or wrong. Trump owns the economy either way. That’s just the way voters treat incumbents in office. So, own it, Mr. President. You have a lot to be proud of.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
Cartoon: To God’s Ears
Click here for a higher level resolution version.
Video: Negative interest rates could spell the end of capitalism as we're paid interest to borrow money
To view online: https://www.youtube.com/watch?v=K8uCQM_ODyM
ALG Editor’s Note: In the following featured column from Foxnews.com’s Liz Peek, economic panics rarely turn out to be accurate barometers of economic health:
Liz Peek: The economic sky isn’t falling – here’s what you need to know about scary ups and downs
By Liz Peek
Let us not let the left-wing media talk us into a recession. Make no mistake: they are eager to do so.
For months the liberal press has echoed Democrats’ hand-wringing on the campaign trail, repeating Sen. Elizabeth Warren’s unwarranted warnings about debt levels for instance, or former Vice President Joe Biden’s alarms about how President Trump’s trade confrontation with China is hurting consumers.
After all, it’s hard to call for a revolution if the people are happy.
Less enthusiastically reported have been record lows in unemployment and accelerating wage increases – news that might buoy consumer sentiment, and, not unimportantly, Trump’s reelection prospects.
That’s why Democrats and their media enablers were beyond giddy to see markets nosedive. This was it, pundits proclaimed: Trump’s trade war has brought us to the brink of a downturn.
Maybe. But maybe not.
The very next day, the Commerce Department reported that U.S. retail sales surged 0.7 percent in July, up from a 0.3 percent gain in June, beating expectations.
Walmart just reported that its “U.S. comp sales increased on a two-year stacked basis by 7.3%, which is the strongest growth in more than 10 years.”
Also, the Labor Department reported that productivity rose 2.3 percent in the second quarter, down from 3.5 percent in the first quarter, but a solid gain nonetheless, and one that bodes well for future wage hikes.
The U.S. consumer continues to defy prognosticators; despite Democrats campaigning on the miseries of the middle class, by gosh the middle class insists on streaming into Walmart and pumping up the economy.
To be sure, the outlook is less rosy than it was several months ago. U.S. manufacturing has weakened, falling 0.4 percent in July, and the rest of the world is struggling. Still, our domestic economy is in good shape; the market reaction appears overblown.
Here’s how to make sense of the recent market plunge:
- Because interest rates in much of the world have turned negative, the U.S. is attracting floods of money from investors worldwide seeking returns. That influx has driven bond prices higher and our rates down, and briefly caused what is called an “inversion,” in which the rate on a 10-year or 30-year bond is lower than the rate on a 2-year instrument. That is unusual, since investors normally demand higher rates in return for committing their money for a longer period of time, but it is not unprecedented.
- A sustained inversion has sometimes indicated a future recession after a period of several months, but not always. Economists differ on the meaning of interest rate patterns today. An astonishing $15 trillion in bonds around the globe are yielding negative interest rates currently; that fact has muddied normal calculations. A further complication is that the Federal Reserve is managing an unusually large $3.8 trillion portfolio of bonds and other debt instruments. Their purchases and sales can meaningfully skew bond prices and interest rates. Bottom line: it’s too early to say the inversion guarantees a recession.
- Stocks are up substantially this year. Even after the recent sell-off, the Dow is ahead 9 percent and the S&P is up 13 percent so far this year. Many investors are responding to the recent ups and downs by harvesting some gains.
- Ultimately, the stock market will trade higher or lower with corporate earnings, which depend on overall economic activity.
Here’s what you need to know about the state of the economy:
- American consumers, responsible for two-thirds of the economy, remain upbeat, and they are spending. If that sector remains strong, we will continue to grow.
- The economic slowdown making headlines is in Europe and China. The most recent data included a second-quarter contraction in Germany’s economy of 0.1 percent compared to the prior three months; in addition, June industrial output sank 5 percent year-over-year. Also, a key indicator of economic sentiment dropped significantly in August, hitting its lowest level since December 2011. The German ZEW index came in at -44.1; economists had expected a more modest negative reading of -28.5.
- China’s economy is also hurting. The most recent sign of a slowdown is that industrial production rose only 4.8 percent in July, the slowest rate in 17 years and down from 6.3 percent in June. Retail sales in July also came in weaker than expected in July, up only 7.6 percent, down from 9.8 percent in June.
A slowdown elsewhere in the world hurts the U.S., without a doubt. But exports make up only about 12 percent of U.S. GDP; moderate weakness should not lead us into recession.
Meanwhile, some elements that bolster optimism, and that should keep panic at bay, include:
- The National Federation of Independent Businesses reported that in July, its Small Business Optimism Index bounced up 1.4 points to 104.7. Maybe more reassuring, the group’s “Uncertainty Index” dropped, reversing a surge in June. Also, the group reported that “Small business owners’ plans to create new jobs and make capital outlays advanced and earnings trends improved, supported by a solid improvement in sales trends. Plans to order new inventories posted a solid gain.”
- Consumer sentiment has also remained robust. That’s because jobs are plentiful and wages are rising. The Bureau of Labor Statistics reported that hourly compensation was up an annualized 4.8 percent in the second quarter after a hefty (revised) 9.2 percent gain in the first three months of the year.
- Inflation is still very low.
Overall, the U.S. economy is sound. Markets may remain choppy, as investors wait to see whether the inversion of rates persists. Possible catalysts for higher stock prices would include a signal that the U.S. Federal Reserve will cut interest rates to keep us in sync with the rest of the world, or a breakthrough in the trade talks between China and the U.S.
Though the latter appears unlikely today, President Trump will push for some resolution. He knows the economy, and his reelection prospects, may depend on it. He’s just ornery enough to deny Democrats their recession.
